Market report: Friday close

MICROCHIP designer Arm Holdings was the best performer among the second-liners, extending its recent strong run with a rise of 7p to 107p as 62.8m of them changed hands.

That included a line of 35m shares (3.5% of the company) that went through on the ticker at 99 1/2p. Trades like this are often the result of a dividend wash, or a switch out of American depository receipts. The company does not pay a dividend, so a dividend wash can be ruled out.

Word is that someone has begun building up a large position in the traded options market, forcing it to be hedged in the underlying cash market. The business is said to have been conducted by US securities house Morgan Stanley.

Rival Lehman Brothers yesterday raised its target price for Arm from 85p to 130p after moving from neutral to positive on the European semiconductors marke t , which according to Intel is showing signs of recovery. Other brokers say Arm looks expensive. The pick-up in the chip market will be good news for BOC, up 46 1/2p at 889 1/2p. Its Edwards subsidiary is a big supplier.

Scottish & Newcastle firmed 1/2p to 385 1/2p. The deadline for bidders for its 1450-strong chain of pubs and hotels, which include Chef & Brewer and Premier Lodge, is today.

S&N is asking £2.5bn and at least six bidders have emerged. They include Mitchells & Butlers, Pubmaster, Laurel Pub Company, Punch Taverns, French venture capitalist PAI Management and even the secretive Barclay brothers, who own the Cameron Brewery.

Other bidders reckoned to be lurking in the wings include private equity firms Cinven and CVC Capital, Guy Hands' Terra Firma and Hugh Osmond's Sun Capital. There has also been talk that the Reuben brothers may be interested. Elsewhere in the drinks sector, SABMiller rose 5 3/4p to 462 1/4p. Broker UBS has repeated its buy recommendation and raised its target price from 500p to 525p.

UBS has reiterated its buy on door-to-door loans group Cattles, 3 1/2p better at 353 1/2p, following Thursday's results and raised its target from 390p to 450p. But the broker has downgraded housebuilder Westbury, 4p cheaper at 433 1/2p, from buy to neutral although it has lifted its target from 410p to 460p. It says Westbury has outperformed since November following its acquisition of Prowting.

Share prices traded in a narrow band ahead of the bank holiday. But the FTSE 100 ceded most of its gains after Wall Street failed to sustain an opening surge. The benchmark London index ended ahead just 2.4 points to 4225.9.

International Power fell 3 3/4p to 150 3/4p after Credit Suisse First Boston downgraded from outperform to neutral when it rose above its 152p target price. MmO2 was 1 1/2p off at 53 1/2p despite Morgan Stanley raising its recommendationon the mobile phones operator from equal weight to overweight.